Bloomberg investigation ties Tether to GENIUS Act with three favorable provisions. A year-long probe reveals how Trump aides Howard Lutnick and Bo Hines helped secure a regulatory equivalence loophole, a three-year compliance grace period, and a DeFi secondary-market liability exemption for the world's largest stablecoin issuer.
A Bloomberg investigation published July 24 alleges that Tether Holdings Ltd. shaped three provisions of the GENIUS Act through lobbying by Trump administration aides Howard Lutnick and Bo Hines, who later received financial benefits from the stablecoin issuer.
"Had this been the law before Trump started his crypto activities, the only thing this ethics provision would do is create some mild paperwork burdens," Corey Frayer with the Consumer Federation of America told the American Prospect, describing the broader conflict-of-interest concerns surrounding crypto legislation.
The investigation, based on interviews with current and former US officials, court filings, and financial disclosures, details how Tether secured what critics call a "regulatory equivalence loophole" — allowing the Treasury secretary to deem El Salvador's oversight sufficient for USDT to operate in the US market. The final bill also includes a three-year compliance grace period for foreign issuers and exempts stablecoin companies from liability for token misuse in secondary decentralized finance markets.
The Lutnick-Tether Pipeline
Howard Lutnick, now Commerce secretary, was chairman and CEO of Cantor Fitzgerald when the Wall Street bank began managing Tether's reserve assets in 2021. In April 2024, Cantor purchased $600 million in convertible notes granting an option to acquire 5% of Tether — a stake valued at roughly $6 billion based on Tether's $13 billion net profit that year, according to Bloomberg. Tether Chairman Giancarlo Devasini described the deal as "ridiculously cheap" to associates, court filings show.
Throughout 2024, Lutnick acted as Tether's de facto representative in Washington, lobbying lawmakers against bills the company opposed and publicly defending its reserves on Bloomberg TV at the Davos forum in January 2024. "They have the reserves they claim to have," Lutnick said at the time. After Trump's election, Lutnick was appointed co-chair of the presidential transition committee.
Bo Hines and the 'Non-Negotiable' Red Line
Bo Hines, a 29-year-old White House aide appointed executive director of the President's Digital Asset Advisory Council, told negotiating parties that retaining the three-year compliance transition period was a non-negotiable red line set by the White House, three sources told Bloomberg. One month after Trump signed the GENIUS Act on July 18, 2025, Hines was hired as an executive at Tether.
The GENIUS Act, which Trump called a "major advance in cementing America's dominance in global finance and crypto technology," established the first federal regulatory framework for payment stablecoins. Tether, which controls about 60% of the global stablecoin market, has since expanded its operations from its new headquarters in El Salvador.
Illicit Finance Concerns Persist
Despite Tether's stated cooperation with 340 law enforcement agencies across 67 jurisdictions, blockchain analytics firm Elliptic tracked more than $40 billion in USDT circulating in fraud-related black markets in 2025. Data shows $507 million in USDT was purchased by Iran's sanctioned central bank, and $2.5 billion flowed to wallets linked to Russian sanctions-evasion networks in July 2025 alone — the month the GENIUS Act was signed.
Since July 2025, federal prosecutors have filed dozens of lawsuits seeking to seize at least $172 million in USDT tied to criminal activity, court records show.
Timothy Massad, former US Commodity Futures Trading Commission chairman under the Obama administration, warned that the regulatory equivalence provision creates unfair competition. "If we want the dollar to maintain its central global reserve currency status, we cannot allow terrorists, sanctioned individuals, and criminals to anonymously transfer dollar funds," Massad told Bloomberg.
Tether denied any improper conduct in its lobbying activities, stating it has engaged in "legal and transparent communication with regulators, lawmakers, and law enforcement." A Commerce Department spokesperson said Lutnick adhered to his ethics agreement, divested all assets including those related to Tether, and "did not participate in any work on the stablecoin provisions of the GENIUS Act." The White House declined to comment.
The investigation raises questions about whether the GENIUS Act's framework — particularly the regulatory equivalence provision still being drafted by the Treasury — will allow Tether's core USDT token to permanently escape direct US oversight, even as it remains the most widely used stablecoin for both legitimate and illicit transactions globally.
This article is for informational purposes only and does not constitute investment advice.
